No matter what industry you represent or what Revenue Management project initiative you are planning, before you can begin you must answer the question – Got Data?
For experienced Pricing and Revenue Management practitioners, this requirement for data comes as no surprise, and in some cases is the catalyst behind a new Revenue Management initiative. However, for Revenue Management pioneers of a new industry, answering this question can often be a hurdle to clear before starting.
Below are some categories of data we analyze before initiating new Revenue Management projects, and should be beneficial for consideration to Revenue Management pioneers.
- Sales history: Sales transaction history is certainly the most essential data an organization collects to ensure they can begin a Revenue Management initiative. This data drives demand analytics and is an essential component of most strategies, so the more comprehensive and accurate it is, the more sophisticated design options will exist for a project.
- Customers: This spectrum can range from being able to identify a unique customer sale to a comprehensive CRM system where you have history of all sales and service interactions, and maybe even demographics. This is frequently the source needed for segmentation analysis.
- Price history: Storing a comprehensive history of pricing attributes (list, ask, sale) for products and services sold is essential for those pursuing a pricing initiative. Price history enables design options for incorporating price effects into forecasting demand models.
- Competitor: Having competitor’s price history along with your own price history enables more design options for explaining demand effects. Some industries share sales data through a third-party provider – which can serve as market share.
- Capacity/inventory levels: Whether it’s a service or product being sold, the inventory level on hand or some measurement of capacity or utilization for a service company present at different points in time is crucial. This data often influences sales and/or pricing history and is essential for inventory optimization.
- Promotional campaigns: Marketing initiatives can be challenging to track over time, but offer additional explanatory variables for demand fluctuations.
An analysis of data available to your organization is essential for starting a Revenue Management initiative because the design options and quality of your results are heavily dependent on your data. Additionally, since delays in starting an initiative can be losses in revenue opportunity, consider incorporating new data over time (as it becomes ready) as an effective way to balance gains over losses as you execute your roadmap to revenue gains.